BitCoin Digital Currency: Financial Revolution or Doomed to Fail?

I recently read a Gizmodo article about BitCoin, a new digital currency that is peer-exchanged — and generated — and aims to “revolutionize global finance.” It’s a nice idea, really, and some stores and services have already adopted it. According to Gizmodo, you can already trade BitCoin tokens for web designers, games, guns, and even drugs — yep… drugs. This sounds like the makings of real money to me, but how far will it — or can it — go?

Money is many things: the root of all evil, maker of spinning worlds, an absolute necessity to live in our society, yada yada. It also has a basis on which to trade — generally gold and silver repositories that give the coins and paper some degree of relative worth. Even our debit and credit cards, which are the primary ways of buying things digitally, are tied up in the worldwide economy of shiny valuable metals. This has been going on for thousands of years, ever since a few people decided that hoarding pretty things was a good way to live — and other people decided they wanted those same pretty things too. In a nutshell, anyway.

Can BitCoin stack up against all of that? It creates itself out of nothing! It’s an app on your computer that uses your machine to crowdsource the power to facilitate the currency’s transactions, all the while generating tiny bits of BitCoins for you. The creators have put some thought into it, sure, putting a cap on the creation of BitCoins (21 million in total) that will introduce scarcity, and therefore a basis for value, but what kind of potential does this new currency have against thousands of years of history? Not to mention that the wheels that turn the economy, like credit card companies, might have a thing or two to say on the matter – especially about the lower of fees, transaction limits, country walls, and other things that provide financial control over users.

I think BitCoin is a nice idea. I think it even has potential — at least to gain some sort of reasonable adoption over the long term. It will probably be a very long term, though, before any real revolution is seen. Everything we do is too tied up in regular currency. There are those out there who believe in BitCoin now, however — and they are trading the online currency at one BitCoin for $7.50. That’s virtual coins for real money — and not bought by someone who is looking to get a new castle or set of armour in their favourite MMORPG.

Think about it.

Is BitCoin revolutionary? Doomed to failure? Ahead of its time? — Or maybe all of the above? Let us know what you think in the comments.

Bobby isn't 40-something, but is a strong supporter of the Grown-up Geek kind. He's a loving husband and father first, but is also a freelance writer, productivity nut, operatically trained singer, and (not-so) closet geek.
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I’d have to agree, Anthony. You never know how fast it might turn around though. Things that would normally take us years have a tendency to turn around with the swiftness these days — especially where the online world is concerned. I blame the viral effects of fanboy mentality, perpetuated by social media (and its adoption into old school media channels).

dave says:

What I find interesting about Bitcoin is the idea. Much like Napster changed the world. The idea of Bitcoin has forever changed the world. The reason I am betting on Bitcoin is simple. Many of the smartest people in the world are working to make Bitcoin a success. I have a degree in Computer Science and Genius level IQ, but can barely comprehend the genius level of some of the people working closely to make Bitcoin a success. The collective intelligence of the community is amazing. Normal people might not ever use bitcoin. Just like today very few normal people own gold. Very few normal people are wealthy. For now there is no good reason for normal people to pay any attention to bitcoin. If you ask “whats it backed buy” admit to yourself you are stupid and move along, the are not the droids you are looking for…

It is most definitely an interesting idea, Dave. And having smart people in their corner won’t hurt.

I think calling people who question it stupid is a bit much, though. After all, you don’t have to be a genius to be smart — and being a genius is not necessarily a sure-fire ticket to success in the really real world. The one where geniuses often end up working for more practical minds. Not to mention the fact that not questioning the how and why of anything that calls itself a currency is probably the very definition of stupid — it’s probably better to ask than let those pesky Jedi pull the wool over your eyes.

FREEDOM MIND says:

The author of the article seems to have a serious lack of basic information about the meaning of money and history of money – why would anybody write an article about something he does not know anything about?

1.) there is no binding to any “metal” any more – this is such a ridicolous disinformation that I really have to ask, if you were living in a cave the last 20 years?

2.) NOT ONE currency does exist that has “thousands of years of history”. Money has a much smaller lifespan that you are dreaming of.

3.) Your unreflected acceptance of credit card companies beeing the rulers of economic life finally show that you are totally brainwashed and not even able to understand the possibilities af a decentralized P2P-currency.

You should read some more about the issue before writing another article about the issue.

Thanks for your comment — though I could do without your tone. I don’t mind a bit of debate, but there’s no need to be rude.

In response to your statements, let me first say that I did not position myself as any sort of expert on money, and that the post is obviously a statement of opinion, attached to a question. Further, talking about money, in general, as being a part of human society for thousands of years is absolutely true. I have no idea why you would think I was referring to only one currency at a time — no one currency could possibly represent the concept of money throughout human history. That would be ridiculous. Money has, however, been around in one form or another since somewhere in the neighbourhood of 5000 to 3000 BC, depending on who your talking to/reading.

Credit card companies running the world and such statements was more me being facetious than anything else. Possibly a little cynical as well. If that equates to brainwashing to you, then so be it. Everything tastes like chicken and the Matrix has me…

As for the binding of things to precious metals, I am aware that, for the most part, that is no longer the case. I know Nixon called off the paper to gold value, and really pissed off the governments of the rest of the world. The concept is still sound, however, for the purposes of this post — but you’re right, I probably should have made some sort of statement regarding that fact. You win a cookie. Thanks for playing.